The Belgian FDI Screening Regime has been introduced by way of a Cooperation Agreement between the Belgian federal government and the governments of the federated entities.

The scheme applies to non-EU physical persons or undertakings willing to invest in certain strategic sectors. To trigger its application, the screening mechanism requires a direct or indirect acquisition of, depending on the sectors concerned, 10% or 25% of the voting rights in entities or undertakings established in Belgium. Sensitive sectors include, inter alia, critical infrastructure, technologies or raw materials of essential importance, critical inputs, access to sensitive information or personal data, but also defense, energy, cyber security or the biotech sector provided that certain turnover thresholds are exceeded.

The regime consists of a combination of national security and strategic considerations. More precisely, it aims at protecting Belgian public order, and national security, but also the strategic interests of the Belgian Regions and Communities, which consist of (a) guaranteeing the continuity of vital processes, (b) preventing certain strategic or sensitive knowledge falls into foreign hands and; (c) ensuring strategic independence.

A "foreign investor" is defined as (i) any physical person with primary residence outside of the EU, (ii) any undertaking from a third country, being an undertaking incorporated or otherwise organized under the laws of a non-EU Member State whereby the registered office of the undertaking or its principal activity is located outside the EU, or (iii) any undertaking where one of the ultimate beneficiary owners has its primary residence outside of the EU. All three categories include, but are not limited to, governments, government institutions, and government undertakings that wish to obtain control in an entity established in Belgium or of which the registered office is established in Belgium.

Therefore, only investments originating from non-EU Member States are covered.

The sectors and activities particularly under scrutiny are as follows:

• Direct or indirect acquisitions of, at least, 10% of the voting rights in undertakings or entities established in Belgium whose activities touch upon defense (including dual-use products), energy, cybersecurity, electronic communications and digital infrastructure, provided that the target’s turnover during the preceding book year exceeded EUR 100 million.
• Direct or indirect acquisitions of, at least, 25% of the voting rights in undertakings or entities established in Belgium whose activities touch upon:
  • critical infrastructure, physical and virtual, for energy, transport, water, health, electronic communications and digital infrastructure, media, data processing or storage, aerospace and defense, electoral or financial infrastructure and sensitive facilities, whether or not they form part of an existing company, as well as land and property essential for the use of such infrastructure, including the critical infrastructures referred to in Regulation (EU) no 1285/2013 of the European Parliament and of the Council of 11 December 2013 on the implementation and exploitation of European satellite navigation systems and repealing Council Regulation (EC) no 876/2002 and Regulation (EC) no 683/2008 of the European Parliament and of the Council, in the Law of 1 July 2011 on the security and protection of critical infrastructures, and in the Royal Decree of 2 December 2011 on critical infrastructures in the sub-sector of air transport.
  • technologies and raw materials that are of essential interest for:
    • (health) safety;
    • national defense or maintenance of public order and of which the interruption, failure, loss or destruction would have a significant impact on Belgium, an EU Member State or the EU;
    • military equipment subject to multilateral and European export control regimes;
    • dual-use items as defined in Article 2(1) of Council Regulation 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items;
    • technologies of strategic importance (and related intellectual property) such as artificial intelligence, robotics, semiconductors, cyber security, aerospace, defense, energy storage, quantum and nuclear technologies;

• the supply of critical inputs, including energy or raw materials as well as food security;
• access to sensitive information, as well as personal data and the possibility to control such information;
• the private security sector;
• freedom and plurality of the media;
• technologies of strategic importance in the sector of biotechnology provided that the company’s turnover in the preceding financial year exceeded EUR 25 million.

It is worth noting that the parties to the Cooperation Agreement can, by way of an implementing cooperation decree, decide to decrease the 25% threshold to a 10% threshold or to increase the 10% threshold to a 25% threshold.

The relevant thresholds consist of the acquisition of, depending on the case, at least 10% or 25% of the voting rights.

For certain sectors, there are also turnover thresholds. For instance, for the areas of activity covered by the 10% threshold, there is a supplementary requirement according to which the target’s turnover during the preceding book year must have exceeded EUR 100 million to trigger the application of the Belgian FDI Screening Regime. The same is true as regards technologies of strategic importance in the biotechnology sector (25% threshold), for which a EUR 25 million threshold applies (see "What sectors are subject to Foreign Investment Restrictions screening?"). 

If the transaction enters the scope of application of the Cooperation Agreement, then the notification is mandatory and has to be filed with the Secretariat of the Interfederal Screening Commission ("ISC"), which is composed of nine members, who are representatives from the federal government, the three Regions, the three Communities, and the French and Common Community Committee.

When a foreign investment meets the thresholds, it must be notified by the ISC’s Secretariat after signing and before the execution of the agreement, the announcement of the bid, or the acquisition of a controlling interest.

A draft agreement is also notifiable, provided that the parties explicitly declare that they intend to conclude an agreement that will not differ significantly on all relevant points from the notified draft. In the case of a public bid, the acquisition of a controlling interest can also be notified in a draft if the intention to make a voluntary or mandatory bid has been publicly announced.

The Belgian FDI Screening Mechanism was not in force yet during COVID-19.

The Belgian FDI Screening Scheme only came into force on 1 July 2023. The answer to this question will be updated later.

The Belgian Screening Scheme consists of a two-stage review – an Assessment Procedure and a Screening Procedure.

Once the notification is filed, the first phase begins: the competent ISC members will assess whether the notified transaction may have a potential impact on public order, national security or strategic interests. When examining whether this might be the case, the ISC will take several elements into consideration, such as (i) whether the foreign investor is controlled by the government or public bodies of a third country, (ii) whether there is a risk that the foreign investor will engage in illegal or criminal activities, or (iii) whether the foreign investor has already participated in activities that have an impact on national security or public order in an EU Member State or a third country.

This first stage can last up to 30 calendar days: during this period, the ISC will have (i) to communicate to the notifying party its decision to positively close the Assessment Procedure, whereby the foreign investment is deemed to be approved, or (ii) to initiate a second stage review.

The second stage review, i.e., the Screening Procedure, is opened when one of the competent ISC members has concrete indications that there is a potential threat to public order, national security or strategic interests. This phase is designed to last 28 calendar days, but the Cooperation Agreement provides for numerous potential extensions.

The Screening Procedure then results in a decision that can take the form of (i) a positive decision granting clearance for the foreign investment, (ii) a conditional positive decision accompanied by corrective measures, or (iii) a negative decision in case a non-remediable impact was identified.

Since the regime entered into force on 1 July 2023, the ISC has not had the chance to be very active yet.

Draft guidelines aiming at clarifying the scope of application and procedure of the Belgian screening mechanism were issued on 31 May 2023 and subsequently updated on 30 June 2023.

Apart from the aforementioned guidelines, there is no other regulatory development foreseen in the next 6 months.